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6. Failing to Have Adequate Insurance - Investment property brings liability. Tenants, cars, parking lots, cleaning facilities, property liability - list is quite extensive. Adequate insurance coverage is an absolute must! Be sure to consult with an insurance professional and protect your hard earned assets.
7. Inspect, Approve, and Confirm All Documents - The list of documents that need to be proofed can be overwhelming to first time investor. Building permits, zoning laws, rental and lease applications, health licenses, laundry leases, underlying loan documents, CC&Rís, by-laws, title policies, mineral leases, inspection reports, purchase contracts, insurance.. donít attempt to do it alone. The right professional can remove most of stress and bring transaction to a conclusion smoothly.
8. Get a Bill of Sale For All Property Involved - Many types of personal property (appliances, furniture, fixtures, etc.) can be involved in an investment sale. Be very detailed -know who owns what!
9. Charge Fair Rents - Vacancies, turnovers and lease terminators are your biggest expense. Charge fair rents, treat your tenants with respect and respond as quickly as possible to their needs. Itís a lot less costly in long run to take care of little problems before they become big problems. Vacant property is your Achilles heel.
10. Select Qualified, Good Tenants From Start - Take time to check references. Previous landlords, employers, financial references, credit and judgments are all vitally important. If there are any questions do a thorough investigation. Drive by their previous residence. A little work up front can save tremendous problems later.
11. Make Sure You Get Estoppel Letters - Get letters from tenants confirming status of tenancy. Make sure their version of rental or lease agreement corresponds with sellers interpretation.
12. Donít Spend Positive Cash Flow - Most of successful investors have free and clear properties. Be sure to re-invest your cash flow back into property payment and speed up amortization schedule. This decreases your debt load and increases your equity which builds your net worth. Investment property can be one of most rewarding aspects of your financial portfolio. Be certain to have all your ducks in a row before you invest. Do your homework! Consult with a professional real estate agent and protect yourself from hidden troubles that can plague first time investors.
Neda Dabestani-Ryba is a licensed Realtor in Maryland. She is a member of the President's Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/ Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity